EXHIBIT 10.9
STANDSTILL AGREEMENT
STANDSTILL AGREEMENT dated as of April __, 1998 among Xxxx
Corp., a Delaware corporation (the "Company"), Xxxxxx Capital Advisors, Inc., a
Florida corporation ("Xxxxxx"), General Electric Capital Corporation, a New York
corporation ("GECC") and GECFS, Inc., a Nevada corporation ("GECFS," and
together with GECC, "GE Capital").
WHEREAS, the parties hereto desire to enter into this
Standstill Agreement (the "Agreement");
NOW, THEREFORE, for due and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
"Affiliate" means with respect to any Person, each Person that
directly or indirectly controls, is controlled by or is under common control
with such Person or any Affiliate of such Person. For the purposes of this
definition, "control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise.
"Beneficial Ownership" shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules issued thereunder.
"Equity Interest" shall mean the greater of the percentage of
the interest in the voting power in the election of directors of the Company or
the percentage of the earnings of the Company represented by any securities
issued by the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and any succeeding law.
"Initial Public Offering" means the first underwritten public
offering of Class A Common Stock, par value $.01 per share, of the Company, that
is effected pursuant to a registration statement filed with, and declared
effective by, the Securities and Exchange Commission under the Securities Act of
1933, as amended.
"Xxxx Deere" shall mean Xxxx Deere Construction Equipment
Company.
"Xxxx Deere Competitor" shall mean any Person who, directly or
through an Affiliate, manufacturers, sells or distributes forestry, industrial,
construction or utility equipment, generally comparable to one or more models of
equipment manufactured or sold, or proposed to
be manufactured or sold, now or in the future, by Xxxx Deere, either as whole
goods or parts thereof, including any dealer or distributor of such equipment or
parts at any level of distribution.
"Liquidation Value" of any share of Series A Preferred Stock
as of any particular date will be equal to $40.00.
"Mortgaged Properties" shall mean the six parcels of real
estate purchased by Xxxx Machinery, Inc., a Florida Corporation ("Xxxx
Machinery"), from Atlantic Real Estate Holding Corporation and physically
located at the following street addresses: (i) 0000 X.X. 00 Xxxxxx, Xxxxx, XX,
(ii) 0000 Xxxxxx Xxxxxx Xxxx Xxxx., Xxxx Xxxx Xxxxx, XX, (iii) 0000 Xxxx Xxxxx
Xxxxxxx, Xxxxxxx, XX, (iv) 0000 Xxxxxx Xxxxxx, Xx. Xxxxx, XX, (v) 0000
Xxxxxxxxxxx Xxxx, Xxxxxxx Xxxxx, XX and (vi) 0000 Xxxxx 00 Xxxxxx, Xxxxx, XX.
"Person" means any individual, sole proprietorship,
partnership (including a limited partnership), joint venture, trust,
unincorporated organization, association, corporation, institution, public
benefit corporation, limited liability company, joint stock company, entity or
government (whether federal, state, county, city, municipal or otherwise,
including, without limitation, any instrumentality, division, agency, body or
department thereof) or any other business entity.
"Private Bond Offering" means the private placement by the
Company of subordinated notes in the principal amount of approximately $100
million or more, which the Company expects to close simultaneously with the
Initial Public Offering and in any event no later than June 30, 1998.
"Sale Transaction" shall mean a transaction pursuant to which
GE Capital decreases its Beneficial Ownership of Equity Interests to less than
20% of Equity Interests either by (i) selling Common Stock to Xxxxxx pursuant to
the Stock Option Agreement by and between GECFS and Xxxxxx, dated March 26, 1998
or (ii) selling Common Stock to a Person other than Xxxxxx; PROVIDED, HOWEVER,
that such Person shall not be an Affiliate of GE Capital, a Xxxx Deere
Competitor or an Affiliate of a Xxxx Deere Competitor.
"Series A Preferred Stock" shall mean the Series A Cumulative
Preferred Stock, par value $0.01 per share, of the Company.
ARTICLE II
STANDSTILL PROVISIONS
2.1. GE Capital will not, and will cause its Affiliates not
to, directly or indirectly:
(a) until the consummation of the Initial Public
Offering, increase their Beneficial Ownership of Equity Interests, through the
acquisition, by purchase or otherwise, of Equity Interests;
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(b) following the consummation of the Initial
Public Offering, increase their combined Beneficial Ownership of Equity
Interests above 25% of Equity Interests, through the acquisition, by purchase or
otherwise, of Equity Interests;
(c) following a Sale Transaction, as long as Xxxx
Machinery or any of their Affiliates is a dealer of equipment manufactured by
Xxxx Deere, increase their combined Beneficial Ownership of Equity Interests
above 20% of Equity Interests, by purchase or otherwise, of Equity Interests;
(d) following the consummation of the Initial
Public Offering, appoint any director to the Company's board of directors;
PROVIDED, HOWEVER, that if GE and its Affiliates sell 15% or more of the Common
Stock of the Company to a Person who is neither a GE Capital Affiliate or a
Deere Competitor, Xxxx may provide that such Person shall have the right to
appoint a director to the Company's board of directors;
(e) following the consummation of the Initial
Public Offering and payment of existing indebtedness to GE Capital under (i) the
Credit Agreement, dated December 31, 1997, by and among the Company, Xxxx
Machinery, Xxxx Rental, Inc., GECC as Agent, and the lenders party thereto; (ii)
the Amended Credit Agreement, dated December 31, 1997, by and among the Company,
Xxxx Machinery, Xxxx Rental, Inc., GECC as Agent, and the lenders party thereto;
(iii) the Mortgage Loan Note for the Mortgaged Properties, dated May 28, 1997,
issued by GECC to Xxxx Machinery and (iv) the Series A Preferred Stock, provide
new financing to the Company (except in connection with trade accounts payable
arising in the ordinary course of business upon the sale of goods or services to
the Company);
(f) following the consummation of the Initial
Public Offering and the redemption of the Series A Preferred Stock, retain
rights, vested or contingent, to exercise any control over the Company;
(g) following the consummation of the Initial
Public Offering and the redemption of the Series A Preferred Stock, make any
attempt to exercise control over the Company, directly or indirectly, either
alone or in conjunction with other shareholders of the Company;
(h) make, or in any way participate, in any
"solicitation" of "proxies" (as such terms are defined in Regulation 14A under
the Exchange Act) with respect to any voting securities of the Company
(including any actions by written consent);
(i) initiate, propose or otherwise solicit, or
participate in the solicitation of, stockholders of the Company for the approval
of one or more stockholder proposals with respect to the Company as described in
Rule 14a-8 under the Exchange Act or induce any other individual or entity to
initiate any stockholder proposals relating to the Company; or
(j) enter into any contract with any third party
with respect to any of the foregoing.
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2.2. So long as the investment in the Company by a pension
plan or other employee benefit plan of GE Capital and/or Affiliates that GE
Capital controls remains solely passive for the duration of such investment, the
restrictions contained in Section 2.1(a), (b) and (c) shall not apply to the
acquisition of Equity Interests by such a pension plan or other employee benefit
plan provided (i) such plan is administered by trustees who are independent of
GE Capital and its Affiliates or by trustees who, due to fiduciary obligations
applicable to them in their capacity as plan trustees, are not subject to the
control or influence of GE Capital or its Affiliates with respect to the
administration of the plan and investment decisions and (ii) such trustees do
not acquire shares of the Company or exercise voting rights of such shares in
coordination or agreement with GE Capital or its Affiliates.
2.3 The restrictions contained in Section 2.1(a), (b) and (c)
shall not apply to:
(i) the acquisition of Equity Interests by GE
Capital and/or Affiliates that it controls in
transactions involving investments, either as
principal or as agent on behalf of third
parties, in the ordinary course of business,
including without limitation, transactions in
which such entities are acting as an investment
banking organization providing advisory
services, an investment advisor, an investment
company, or a broker or dealer in securities;
(ii) the acquisition of Equity Interests by GE
Capital and/or Affiliates that it controls in
the ordinary course of their insurance
business;
(iii) the acquisition of Equity Interests by the
General Electric Company and/or any of its
Affiliates except GE Capital and Affiliates
that GE Capital controls; and
(iv) other acquisitions not intended to result in
the exercise of control over the Company
that inadvertently cause the combined Beneficial Ownership of Equity Interests
of GE Capital and its Affiliates to exceed 25% (after the consummation of the
Initial Public Offering and before October 29, 1999) or 20% (on or after October
29, 1999) of Equity Interests. PROVIDED, HOWEVER, that such investments must
remain solely passive for the duration of such investment, and (A) after the
consummation of the Initial Public Offering and before October 29, 1999, if GE
Capital learns that the combined Beneficial Ownership of Equity Interests of GE
Capital and its Affiliates (other than investments permitted by Section 2.2)
exceeds 25% of Equity Interests, then during the period beginning no later than
the fifth business day and ending no later than the fifteenth business day
thereafter, GE Capital will effect the orderly divestment of a sufficient number
of shares so that the combined Beneficial Ownership of Equity Interests is equal
to or less than 25% of Equity Interests; and (B) on or after October 29, 1999,
if GE Capital learns that the Combined Beneficial Ownership of Equity Interests
of GE Capital and its Affiliates exceeds 20% of Equity Interests, then during
the period beginning no later than the fifth business day and
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ending no later than the fifteenth business day thereafter, GE Capital will
effect the divestment of a sufficient number of shares so that the combined
Beneficial Ownership of Equity Interests is equal to or less than 20% of Equity
Interests.
2.4. It is the intention of GE Capital and the Company that GE
Capital's Beneficial Ownership of Equity Interests be less than 20% of Equity
Interests not later than October 29, 1999. If GE Capital has not consummated a
Sale Transaction by October 29, 1999, Xxxxxx shall, no later than October 29,
1999, exercise the option to purchase Common Stock granted to it by GECFS
pursuant to the Stock Option Agreement by and between GECFS and Xxxxxx, dated
March 26, 1998.
ARTICLE III
REDEMPTION OF SERIES A PREFERRED STOCK
The Company hereby covenants that on the day of the
consummation of the Private Bond Offering the Company will redeem in cash all of
the issued and outstanding shares of the Series A Preferred Stock, at a price
per share equal to the Liquidation Value thereof (plus all accrued and unpaid
dividends thereon).
ARTICLE IV
MORTGAGED PROPERTIES
The Company hereby covenants that on the day of the
consummation of the Private Bond Offering the Company will repay all of the
outstanding principal amount of indebtedness, together with any accrued
interest, secured by liens on the Mortgaged Properties.
ARTICLE V
TERMINATION
This Agreement shall terminate on the earlier of (i) the date
Xxxx Machinery is no longer a dealer of equipment manufactured by Xxxx Deere;
(ii) 4 years after the date GE Capital and its Affiliates no longer have more
than 5% of the Equity Interests in the Company or (iii) the sale by the Company
of its entire ownership interest in Xxxx Machinery as long as (a) Xxxx Deere is
provided, in advance of the sale, complete access to the full details of the
proposed sale and gave its written approval of the sale and (b) upon
consummation of the sale, no interdependence remains between Xxxx Machinery, on
the one hand, and the Company, Xxxx Rental, Inc., GE Capital or any GE Capital
Affiliates, on the other.
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ARTICLE VI
MISCELLANEOUS
6.1. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect.
6.2. SPECIFIC ENFORCEMENT. GE Capital hereby acknowledges and
agrees that, if a court determines, after a hearing, that irreparable damage
would occur to the Company in the event that any provision of Article II of this
Agreement was not performed by GE Capital in accordance with its specific terms
or was otherwise breached by GE Capital, the Company shall be entitled to obtain
specific performance of any provision of this Agreement and injunctive or other
equitable relief to prevent or cure breaches of any provision of this Agreement,
this being in addition to any other remedy to which the Company may be entitled
by law or equity.
6.3. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York. Each of the parties hereto hereby irrevocably and
unconditionally consents to submit to the non-exclusive jurisdiction of the
courts of the State of New York and of the United States of America, in each
case located in the Borough of Manhattan, in the City of New York, for any
action or proceeding commenced by another party hereto in any court
("Litigation") arising out of or relating to this Agreement, and further agrees
that service of any process, summons, notice or document by U.S. registered mail
to its respective address set forth in this Agreement shall be effective service
of process for any Litigation brought against it in any such court. Each of the
parties hereto hereby irrevocably and unconditionally waives any objection to
the laying of venue of any Litigation arising out of this Agreement or the
transactions contemplated hereby in the courts of the State of New York or the
United States of America, in each case located in the Borough of Manhattan, in
the City of New York, and hereby further irrevocably and unconditionally waives
and agrees not to plead or claim in any such court that any such Litigation
brought in any such court has been brought in an inconvenient forum. Each of the
parties irrevocably and unconditionally waives, to the fullest extent permitted
by applicable law, any and all rights to trial by jury in connection with any
Litigation arising out of or relating to this Agreement.
6.4. ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties hereto with respect to the matters covered hereby
and this Agreement may be amended only by an agreement in writing executed by
the parties hereto.
6.5. NOTICES. Any notice provided for in this Agreement shall
be in writing and shall be either personally delivered, or mailed first class
mail (postage prepaid) or sent by reputable overnight courier service (charges
prepaid) to the recipient party at the address set forth below or at such
address or to the attention of such other person as the recipient party has
specified by prior written notice to the sending party. Notices will be deemed
to have been given hereunder when delivered personally, four business days after
deposit in the U.S. mail and one
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business day after deposit with a reputable overnight courier service. The
addresses for such communications shall be:
If to the Company:
Xxxx Corp.
0000 X.X. 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn.: Xxxxx X. Xxxxxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Suite 800
1001 Pennsylvania Avenue
Washington, DC 2004
Attn.: Xxxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
If to GE Capital:
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx X First Floor
Stamford, Connecticut 06927
Attn.: Risk Manager
Facsimile: (000) 000-0000
with a copy to:
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx X First Floor
Stamford, Connecticut 06927
Attn.: Counsel
Facsimile: (000) 000-0000
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If to GECFS:
GECFS, Inc.
c/o General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx, Xxxxxxxx X
First Floor
Stamford, CT 06927
Attention: Risk Manager
Telecopy: (000) 000-0000
With a copy to:
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx, Xxxxxxxx X
First Floor
Stamford, CT 06927
Attention: Counsel
Telecopy: (000) 000-0000
6.6. WAIVERS. No waiver by either party of any breach of any
provision hereof shall be deemed to be a continuing waiver in the future thereof
or a waiver of any other provision hereof; nor shall any delay or omission of
any party to exercise any right hereunder in any manner impair the exercise of
any such right accruing to it thereafter.
6.7. HEADINGS. The headings herein are for convenience only,
do not constitute a part of this Agreement, and shall not be deemed to limit or
affect any of the provisions hereof.
6.8. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their successors and
legal representatives. Neither the Company nor GE Capital or any of their
respective affiliates shall assign this Agreement or any rights hereunder
without the prior written consent of the other parties hereto.
6.9. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original and all of which, when
taken together, shall constitute one and the same instrument. This Agreement
shall become effective when original counterparts of this Agreement shall have
been duly executed and delivered by all parties hereto.
* * *
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IN WITNESS WHEREOF, the parties hereto have executed this
Standstill Agreement on the day and year first above written.
XXXX CORP.
By:/S/ XXXXX X. XXXXXXXXXX
------------------------------------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: President and Chief Executive Officer
GENERAL ELECTRIC CAPITAL CORPORATION
By:/S/ XXX XXXXXX
------------------------------------------------
Name: Xxx Xxxxxx
Title:
GECFS, INC.
By:/S/ XXX XXXXXX
------------------------------------------------
Name: Xxx Xxxxxx
Title:
XXXXXX CAPITAL ADVISORS, INC.
By:/S/ XXXXX XXXXXXXXXX
------------------------------------------------
Name: Xxxxx Xxxxxxxxxx
Title:
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